Technological progress will
A) shift the SAS curve rightward but will not shift the LAS curve.
B) shift both the LAS and SAS curves rightward.
C) not shift either the LAS or the SAS curve.
D) shift the LAS curve rightward but will not shift the SAS curve.

Question

Quizplus · Accepted Answer

Technological progress is a factor of long-term economic growth and productivity. By increasing productivity, it shifts the SAS curve rightward. However, technological progress also enables firms to produce more goods and services at a lower cost, which leads to a decrease in the price level. As a result, firms are incentivized to produce more than before, shifting the LAS curve rightward as well. Therefore, technological progress shifts both the LAS and SAS curves rightward.

Technological Progress Will